Since last week’s ISRI Market Report, the Dow Jones Industrial Average plummeted 20 percent lower to close at 19,173.98 on Friday, March 20th. Since its peak on February 12, 2020, the DJIA has plunged by more than 10,000 points, or roughly 35 percent.
On Monday, March 16th alone, the DJIA closed 2,997.1 points lower, its largest single-day point drop in history.
Crude oil futures in New York, which were trading above $60 per barrel early in the year, approached $20 per barrel this week, the lowest level since 2002. As oil prices have plummeted, concerns about inflation have practically vanished. (See the report on producer price inflation in the economic data section.)
Base metal prices, which had experienced less volatility than other asset classes early in this sell-off, capitulated this past week. In New York, COMEX copper futures started the trading week at $2.51 per pound. By Thursday, most-actively traded May COMEX copper futures hit an intra-day low of $1.9725/lb., according to CME data. At the London Metal Exchange, over the course of the last week the LME official 3-mo. asking price for copper declined 12.3% to $4,868 per metric ton as of Friday.
Foreign Exchange Trading
There’s been a divergence in the performance of safe-haven assets lately. COMEX gold futures, for example, spiked around $1,700 per troy ounce two weeks ago, but subsequently dropped to less than $1,500/to. But the flight to U.S. dollars has been dramatic. As of Friday, the euro was only buying $1.076 while the British pound was trading around $1.165. For comparison’s sake, the British pound was trading above $2 prior to the last recession…
As the WSJ’s Daily Shot reports, “Investors are flooding into Treasury bills, rapidly shrinking their portfolio durations. T-Bill yields have turned negative.” As with other markets, coronavirus worries, along with recent monetary and fiscal stimulus actions, are driving bond market developments. More on that below.